Farm credit flow highest in South India, lowest in North East: ASSOCHAM

Credit flow in agriculture remains highest in South India but least in the north eastern region due to lack of awareness about the existing schemes, according to the latest The Associated Chambers of Commerce and Industry of India (ASSOCHAM) report.

The ASSOCHAM recent study on 'Agriculture credit in India' reveals that, poor awareness about existing crop loans has deprived small and marginal farmers including tenant farmers and share croppers from availing agricultural credit not only in north eastern region, but also eastern and western parts of the country.

"Credit flow to farmers from banks in all four states like Karnataka, Andhra Pradesh, Tamil Nadu and Kerala is higher than other states. There is increased awareness about farm credit because of initiative taken by the government and banks," according to the sector-specific analysis carried out by ASSOCHAM.

Credit flow to farmers in south India is expected to be higher even this fiscal taking into account the past trend. Credit disbursement to farmers in northern India is also likely to be better than 2012-13 fiscal.

Farm credit flow in South India rose to Rs 1,84,046 crore in 2010-11 fiscal from Rs 1,12,342 crore in 2008-09. Similary, credit flow to farmers in North India increased to Rs 1,15,636 crore from Rs 84,342 crore in the same period.

However in north eastern region, credit flow remained at Rs 4,620 crore in 2010-11, lowest as compared to other parts of the country. Farm credit flow to farmers in western and eastern region has increased marginally to Rs 62,804 crore and Rs 38,261 crore, respectively, in 2010-11 fiscal.

"Although several initiatives have been taken by the government in recent years, there are some bottlenecks that continue to affect the flow of credit to agriculture. The policies are in place but promotional efforts are required to be taken to reach the largely disadvantaged section of farmers," ASSOCHAM Secretary General D S Rawat said.

The credit flow to agriculture has cross Rs. 5,75,000 crore during 2012-13 fiscal. In-spite of increased credit flow to agriculture in the last few years, the growth under agriculture has been very lower, he said.

The share of agriculture fell below 14 per cent to the country's GDP in the 2012-13 fiscal despite more than 50 per cent of the population dependent on the sector.

According to the report, the credit flow to small and marginal farmers has been increasing in the last few years, but assistance to tenant farmers (including Share croppers, oral lessees) by formal financial sector need to be scaled up in the coming years to achieve higher growth in agriculture.

Credit flow to tenant farmers has been negligble even though banks are allowed to give credit upto Rs 1 lakh by taking a declaration from Gram Sabha, the report said.

"There is dire need for conducting awareness camps in association with the concerned banks to pursue farmers to approach banks. State governments and local panchayats should take initiative to spread awareness about farm credit," Rawat suggested.

The need for affordable, sufficient and timely supply of institutional credit to agriculture has assumed critical importance to ensure the agriculture and allied sectors grow at 4 per cent in the 12th Five Year Plan, he noted.

The country faces many challenges to meet food demand of growing population in the backdrop of climate change and depleting natural resources. The major challenge that farmers continue to face is inadequate credit facility, Rawat added.

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